Indeed - I'd rather not remove overlays without being certain we don't need them. For now though, let's just get the splash screen working again (as it's a little un-nerving for new users to be presented with a straight black screen during boot and have no indication anything's working other than a blinking LED).

In this case I'm certain all the kernel modules required are being built (because as mentioned psplash works *after* boot), but there's only a single kernel module (which looks related to i2c) present in the current initrd.img (which is part of the kernel snap). So I think the only thing required here is to ensure that the kernel modules which were present in the stable/current version (snap rev 21) are also present in the current version (snap rev 42).

Specifically, the kernel modules included in the initrd in snap rev 21 are as follows:

lib/modules/4.15.0-1031-raspi2/kernel/drivers/video/fbdev/core/sysfillrect.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/video/fbdev/core/syscopyarea.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/video/fbdev/core/sysimgblt.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/video/fbdev/core/fb_sys_fops.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/ipu-v3/imx-ipu-v3.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/arm/mali-dp.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/arm/hdlcd.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/vgem/vgem.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/drm_kms_helper.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/vc4/vc4.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/i2c/sil164.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/i2c/tda998x.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/i2c/ch7006.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tve200/tve200_drm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tinydrm/repaper.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tinydrm/mipi-dbi.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tinydrm/st7586.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tinydrm/mi0283qt.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tinydrm/core/tinydrm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/mxsfb/mxsfb.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/synopsys/dw-hdmi-cec.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/synopsys/dw-hdmi-i2s-audio.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/synopsys/dw-hdmi.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/synopsys/dw-hdmi-ahb-audio.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/nxp-ptn3460.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/adv7511/adv7511_drm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/lvds-encoder.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/ti-tfp410.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/dumb-vga-dac.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/tc358767.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/sii902x.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/sil-sii8620.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/parade-ps8622.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/sii9234.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/megachips-stdpxxxx-ge-b850v3-fw.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/bridge/analogix-anx78xx.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/virtio/virtio-gpu.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/pl111/pl111_drm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/tilcdc/tilcdc.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/drm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-samsung-s6e63j0x03.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-sharp-lq101r1sx01.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-simple.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-innolux-p079zca.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-sharp-ls043t1le01.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-samsung-s6e8aa0.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-jdi-lt070me05000.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-seiko-43wvf1g.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-raspberrypi-touchscreen.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-samsung-ld9040.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-samsung-s6e3ha2.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-sitronix-st7789v.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-lg-lg4573.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-lvds.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-orisetech-otm8009a.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/panel/panel-panasonic-vvx10f034n00.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/arc/arcpgu.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/ttm/ttm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/exynos/exynosdrm.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/gpu/drm/udl/udl.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/media/cec/cec.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/media/rc/rc-core.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/i2c/busses/i2c-bcm2708.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/virtio/virtio.ko
lib/modules/4.15.0-1031-raspi2/kernel/drivers/virtio/virtio_ring.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/soc/snd-soc-core.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/ac97_bus.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/core/snd-compress.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/core/snd-timer.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/core/snd.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/core/snd-pcm.ko
lib/modules/4.15.0-1031-raspi2/kernel/sound/core/snd-pcm-dmaengine.ko

Whereas the only one present in snap rev 42 is:

lib/modules/4.15.0-1041-raspi2/kernel/drivers/i2c/busses/i2c-bcm2708.ko

I'm reasonably sure some of the kernel modules in 21 aren't actually required in the initrd (for instance, I doubt we need the kernel/sound stuff during early boot), but it might be simplest to just revert whatever change removed all those modules.